How retail labour management drives performance

Approximately 65% of best in class retailers are adopting a more proactive strategy toward their staffing plans by balancing tasks, customer service, and selling procedures, according to new Aberdeen Group research report.

The report, entitled 'Automated Workforce Management Driving Performance', found that 80% of best in class retailers have either improved or met their labour turnover rate goals as a result of improved work force management (WFM).

Retail staff processes
In order to meet these goals, the best in class were 72% more likely than the industry average to assess staff needs, skills, and talent development, and 40% more likely to have guidelines for workforce process and product training.

However, those defined as 'laggards' tend to assign and manage 90% of tasks at the retail store level, with little or no task completion reporting and compliance. Interestingly, 63% of all respondents said they plan to spend money on workforce management solutions in the next 12-24 months, suggesting that retailers generally see a need to improve the way they management their work force.

Improved operating profit
The report found that work force management processes helped 63% of best in class retailers to improve operating profit as a percent of sales. According to Sahir Anand, retail research analyst for Aberdeen, reasons for superior best in class performance included:

• Better use of scheduling optimisation solutions for effective staffing;
   
• Increasing WFM analytics solutions for store operations performance management;
   
• Greater implementation of employee self-service HR (e.g. paid time-off, FMLA, benefits, and so on), and training applications (including workforce, inventory, other retail policies, and procedures).

The results showed that automation and integration are also playing a key role in the work force management strategies of many retailers. For example:

• 63% of enterprises surveyed reported that they plan to spend money on WFM solutions during the 2007-2008 fiscal year;
   
• Retailers have planned to adopt integrated WFM solutions (31%), WFM analytics solutions (60%), self-service process and product training solutions (32%), and task management solutions (30%) within the next 12-months.

Competitive assessments
Aberdeen used four key performance indicators (KPIs) to identify 'best in class' retailers:

1. Improved labour cost containment;
2. Reduced employee turnover rates;
3. Improved operating profit as percentage of sales;
4. Improved schedule effectiveness.

Best in class performers shared several common characteristics with respect to their WFM solution implementation strategy, such as:

• By using the WFM process more effectively than the rest, 80% of best in class have improved or met their labour turnover rate goals, resulting in improved bottom line performance due to retention savings and higher service standards;
   
• Best in class retailers are 9 times more likely than laggard retailers to use WFM metrics for measurement and reporting of store workforce performance;
   
• Best in class are currently 6 times more likely than laggards to use long-term forecasting tools for budgeting and labour allocation.

Recommendations
In addition to the specific recommendations in the report, to achieve best in class performance, Aberdeen suggests that retailers should:

1. Adopt a detailed workforce strategy for workforce functions including scheduling, task management, training, and store-level HR procedures. Automation can play a pivotal role;
    
2. Implement web-based processes and eliminate paper-based manager and associate procedures that lead to poor usage of labour hours and higher operational costs;
    
3. Provide store teams with a common dashboard for executing workforce functions and tasks to enable a planned and systematic approach to sales and service;
    
4. Plan a phased integration of WFM strategies and solutions, preferably using a single solution platform to merge all point-of-sale (POS) and HR data into one system.

The full report has been made available to download from Aberdeen Group's web site for a limited time - click here (free registration required).